Options for Action

If Wisconsin were to match Arizona, Maryland, Massachusetts, New York, and Vermont—states that have ramped up their targets to achieve energy savings of at least two percent of retail sales through efficiency we could realize significant reduction in energy costs and emissions. Moreover, the American Council for an Energy-Efficient Economy (ACEEE) found that adopting energy efficiency policies nationwide would, by 2030, create 611,000 jobs, increase GDP by $17.2 billion and reduce CO2 emissions by 26 percent. Wisconsin can realize its portion of those benefits by joining other states on the leading edge.

A two-percent reduction in Wisconsin’s industrial energy use alone would reduce the state’s greenhouse gas emissions by over 400,000 metric tons per year, according to a study prepared for the Wisconsin Global Warming Task Force. Wisconsin companies are already independently taking steps to develop sustainable, clean energy sources. As the profiles in this report illustrate, businesses such as Gundersen Health System, Quad/Graphics, Johnson Controls, MillerCoors, and others are setting their own goals and making investments in technology, practice, and new strategies, and these actions are reducing greenhouse gas emissions.

Options to move energy efficiency forward:

• Increase overall funding to Focus on Energy (e.g., 10 percent per year for at least five years) to support improvements in conservation and energy efficiency
• Give priority to projects where there is the most bang for the buck and where the programs will help make the state more competitive.
• Set clear, measurable goals for efficiency improvements.
• Offer incentives to utilities to invest in efficiency programs.

The adoption of energy retrofits, which address improvements in heating, cooling, lighting, and water use, is a cost-effective energy strategy that has contributed to considerable energy conservation in many states. Offering financial incentives for local implementation of new regulations has further aided regions as they strive to improve their energy efficiency. For example: Wisconsin has already enacted enabling legislation for Property-Assessed Clean Energy (PACE). Sponsors of the legislation stated:

Under PACE programs, municipalities and counties form special tax districts to help property owners finance energy retrofits by allowing a property owner to place an additional tax assessment on his or her property. Property owners who invest in energy efficiency measures and small renewable energy (RE) systems repay these assessments over 15 to 20 years via additional annual payments on their property tax bills. State and local governments that implement the PACE model can address two major roadblocks to clean energy growth at the residential level: lack of capital and hesitancy to make long-term investments in energy efficiency or renewable energy.

These programs are already supporting local projects such as the Milwaukee Energy Efficiency (Me2) program and Save Some Green in River Falls.

Wisconsin recently enacted legislation to increase the historic preservation tax credit from 5 to 20 percent. When combined with a similar 20 percent federal tax credit, this could be a strong incentive to rehabilitate older buildings and incorporate green building and energy efficient practices as we reinvest in Main Streets in communities across the state.

Retrofits of public buildings, and especially schools, yield tax benefits to the local community (in terms of energy cost savings). These buildings also serve as a resource for students, teachers, and other community members to learn about energy conservation and efficiency, green building design, and sustainable systems.

Options to move retrofits forward:

• Phase in efficiency requirements at the point-of-sale for residential and commercial properties, coupled with financing for efficiency upgrades so that energy cost savings exceed monthly financing costs.
• Provide tax credits for new green-building facilities, coupled with financing, such as low-interest loans, making investments in efficiency upgrades profitable for purchasers.

We can better manage energy use if we can measure it. Benchmarking is a way for property managers to compare their energy use to use in similar buildings.Right now, only five percent of Wisconsin’s buildings—half of which are schools—are Energy Star certified. (The Energy Star program, established by the EPA, identifies, promotes, and certifies products and buildings that meet their energy efficiency standards.) These buildings use an EPA online scoring system called Portfolio Manager to help track their performance in comparison to performance in similar facilities.

Options to move benchmarking forward:

• Provide tax incentives to property managers who benchmark and disclose the efficiency of their commercial or residential rental properties. Over time, phase in energy disclosure requirements for all rental properties.
• Provide revenue incentives to public school districts that use Energy Star Portfolio Manager to benchmark the energy efficiency of school facilities on an ongoing basis.
• Require the state to use Energy Star Portfolio Manager to benchmark the energy performance of all state buildings and set annual targets to increase efficiency of lowest performing buildings until all state buildings qualify for Energy Star certification.
• Encourage utilities to participate in federal Green Button data initiatives. These represent an industry-led effort to enable customers to easily access and securely download their energy usage data via a “Green Button” on electric utilities’ websites. With this information, consumers can use a growing array of new web and smartphone tools to make more informed energy decisions and investments, and even use apps for competing to save energy and lower their carbon emissions.

Policy changes in key areas can promote efficiency and conservation through tax, financial, and regulatory incentives that reward energy conservation measures applied to buildings, manufacturing processes and facilities; and supply chain management.

Options for spurring conservation and efficiency:

• Provide tax credits for new LEED-certified (or comparable quality Green Building Initiative) facilities.
• Set a statewide goal of negawatts to spur energy efficiency and clean energy technology. (Negawatts is a term coined to describe power saved through conservation or efficiency measures that can offset rising demand for power, both for businesses and the environment).
• Consider instituting a revenue-neutral Wisconsin feebate to spur clean energy development and carbon footprint reduction projects. Feebates reward efficient resource users with fees paid by the inefficient. For example, an electricity sector feebate might set a price on CO2 emissions per kWh. Firms with emissions per kWh above a certain threshold (averaged across their portfolio of generation plants) would pay a fee, while those with emissions below the threshold would receive a rebate. Over time, the CO2 per kWh threshold would be reduced incrementally as more clean energy and carbon footprint reduction projects come online.
• Enhance appliance standards in Wisconsin. (California and other states have ratcheted theirs up beyond federal standards.) For appliances like furnaces, national standards are out of step with our cold weather climate and need revision.
• Provide tax credits for energy conservation measures and customer-based renewable generation, including utility-leased systems.
• Automatically update energy efficiency building codes for residential and commercial buildings to match the most recent International Energy Conservation Code (IECC).
• Require all new state buildings to meet the most recent efficiency standards.

Wisconsin can realize a much larger role for solar energy, smart use of biomass, and expanded wind generation by committing to a minimum 1-to-1.5 percent average annual increase in renewable energy generation starting in 2015.

In order for this to happen, we need to acknowledge that these are immature markets and that shifting policy priorities can jeopardize market development. For example, inconsistent incentives at the federal level hurt wind development. Similarly, Wisconsin’s changing priorities on renewables (e.g. limiting solar incentives) have hurt the solar industry in the state. Ambivalent attitudes toward wind development in Wisconsin have shifted investments to other states.

A balanced approach, supporting a variety of resources in varying amounts and increasing renewables in a measured but constant way is low risk and keeps a foot in most technologies and pathways. It will also move our manufacturing capacity toward 21st-century products.

Options to move renewables forward:

• Mandate that utilities take the lead in renewable development by requiring a minimum 1-1.5% average annual increase in renewable electrical generation (above and beyond customer installations) starting in 2015.
• Offset new growth in electrical energy demand with renewable energy sources.
• Allow third parties to own and lease distributed generation, such as roof-top solar.
• Create a renewable thermal energy standard to help develop markets for Wisconsin-based bioenergy products and services.
• Provide tax credits and loans for customer-based cogeneration facilities, and allow utilities to own and/or lease cogeneration systems, like the Domtar biomass system in Rothschild, Wisconsin.
• Once Wisconsin state government buildings have met cost-effective energy standards, require the government to purchase an increasing percentage of its electricity from renewable resources.
• Take advantage of changes in the existing grid infrastructure to incorporate more clean renewable energy. For example, the shutdown of the Kewaunee nuclear power plant could offer an opportunity to expand local wind and other renewable technologies in Northeast Wisconsin.

The costs of solar energy have decreased to the point where solar is becoming competitive with conventional fuel sources. Recently, a major utility solar project outbid a natural gas project to win a contract to provide peak energy in Minnesota. Minnesota and a number of other states have been instituting value of solar tariffs (also known as VOSTs). These tariffs use a formula to assess the per kWh benefit of distributed solar energy as it is placed on the grid. The formula takes into account technical, environmental, and societal benefits to the utility infrastructure, which strengthens the economic case for solar. There are multiple practical and effective uses of solar energy in Wisconsin, both for electricity from photovoltaic arrays and heat (for living space and for water) from both passive and active designs.

Wisconsin is already invested in co-burning a mix of biomass and conventional fuels such as wood chips and coal at multiple facilities and has been a leader in developing biomass (manure and other organic matter) digesters. Co-burning makes good sense when renewable source materials are close to the generation facility and in relatively constant supply. With an abundance of wood chips and scraps, paper pulp mills are already demonstrating the value of this approach. In an agricultural state with one of the world’s largest dairy industries, the expansion of biogas-producing digesters that generate both heat and electricity also makes sense—especially for large farm and food production facilities.

Grass biomass as fuel for heat and cogeneration (i.e., producing both heat and power) deserves more attention, given grass’s additional benefits as a protective soil cover, a carbon storage site, and a potential feedstock for biofuels such as ethanol.

As research on cellulosic ethanol makes progress, Wisconsin should evaluate its goals and priorities for biomass feedstocks. The state must balance the need for lands dedicated to food crops, pasture, forests, wildlife habitat, and other uses against the need for land devoted to growing biomass for biofuel production and power generation. Decisions should be guided by criteria that protect public values.

While Wisconsin’s wind capacity may not be as high as Iowa’s or Minnesota’s, it is still significant. With continual improvements in wind turbine efficiency, costs per kilowatt hour from wind are becoming much more competitive and, over the long-term, wind has the advantage of no fuel price increases from unpredictable global markets. Carefully sited high-efficiency wind turbines need to be part of Wisconsin’s renewable strategy, both from a carbon reduction standpoint and from the stand- point of attaining competitive electrical rates in a regional and global economy. Wind can advance home-grown technologies to keep energy dollars active in local economies. Compared to Iowa, where transmission congestion charges for accessing Iowa’s wind energy are an issue, Wisconsin—with adequate local transmission capacity—may look more promising to wind power developers.

Wisconsin utilities have the opportunity to be pivotal players in a clean energy transition. America’s Power Plan (APP) is a new initiative that is looking at many challenges: game-changing new technologies; increasing consumer demand for cleaner, more efficient energy; an aging and increasingly obsolete power grid; and opportunities for a dramatic reduction in the cost of renewable sources of energy—all of which are reshaping America’s electricity sector.

Options to move utility leadership forward:

• Reform the regulatory model to encourage utilities to pursue aggressive conservation and distributed renewable generation targets.
• Devise a timeline and strategy to retire Wisconsin’s oldest and dirtiest coal plants so that they can be replaced with low or zero-carbon fuels.
• Work with other states to address aspects of utility structures and the electrical grid that present barriers to renewable energy development.
• Work with the Legislature and energy leaders to identify clean alternatives to propane-dependent energy for rural Wisconsin.
• Increase combined heat and power generation (cogeneration) in Wisconsin.
• Work with stakeholders, including utilities and electrical energy consumers, to develop robust state implementation of the EPA’s Carbon Pollution Standards for power plants.

Establishing a price on carbon emissions (through a tax or trading mechanism) is widely seen among climate change strategists as one of the most effective strategies for reducing emissions. While a federal solution would create clarity in the marketplace, Wisconsin can still explore ways to put a price on carbon.

Options for putting a price on carbon:

• Support research and data analysis on options for monetizing carbon.
• Explore reinstating a regional greenhouse gas market in the Midwest.
• Consider imposing a revenue-neutral carbon tax to fund conservation and efficiency.

Wisconsin has many opportunities to diversify and modernize its transportation systems in ways that could improve energy efficiency and increase mobility choices for people throughout the state while also providing more efficient distribution capacity for freight.

• Support regional public transportation and non-motorized vehicle transportation initiatives around the state.
• Replace outdated planning assumptions about linear growth with new information on emerging transportation trends such as fewer passenger vehicle miles traveled.
• Spend a larger portion of gas tax revenue money on transportation infrastructure in cities and towns as opposed to new highway construction.
• Support economic development that provides rail and/or marine transportation options for freight.
• Require that state Department of Transportation plans consider options for a shift of freight from trucks to rail or marine transport when planning highway expansion.
• Provide tax credits for plug-in hybrid and all-electric vehicles.
• Restrict passenger and freight vehicle idling, especially outside of schools, malls, and other public facilities.
• Encourage communities to support energy-smart driving strategies by synchronizing traffic lights and by providing education about fuel-saving driving practices.
• Develop and execute a plan for high-speed rail between Chicago, Milwaukee, Madison, Eau Claire, La Crosse and Minneapolis (considering a spur route to include Green Bay/Appleton), to be fully completed by 2025.
• Encourage research and development for compressed biogas fuel use in transportation fleets.

While significant gains can be made with current technologies, research can carry us toward new breakthroughs. Data analysis can help us evaluate which approaches are effective.

Options to move research on clean energy, carbon storage, and improved energy efficiencies forward require an investment in public and private research and development for:

• Great Lakes wind.
• Bioenergy—Capitalize on potential for greater use of manure digesters, woody and grassy biomass, and cellulosic ethanol.
• Biochar development and applications. (Biochar is high-carbon charcoal. When buried, carbon is sequestered and soils are amended.)
• Natural carbon storage. All plants, living and dead, store carbon in their cellulose. Investigate ways to manage natural ecosystems and soils rich in plant detritus to maximize carbon storage.

To measure our progress toward cleaner and more resilient energy strategies, we recommend using a framework that monitors these factors:

• Reduction of carbon emissions; Financial savings based on the cost of energy, both in terms of rates and overall spending.
• New installation of solar, wind, thermal and bioenergy power.
• Quality of life, comfort, and convenience (the happiness index).
• Economic development across the state.
• Sustaining cultural values, traditions, and ecological integrity.

In order for these measures to have value, specific benchmarks, targets, and goals are needed. Done well, these could provide a clear picture of our progress, help us learn and adapt strategies accordingly, and share advances with other states and regions.